Te Waipounamu

Texas and the Research and Development (R&D) Tax Credit

State Credit Name: Texas Research and Development Tax Credit

Expiration Date: December 31, 2026

Who Can Apply? Corporations and flow-through entities

Credit Carry Forward: Unused Texas R&D credit can be carried forward 20 years.

About the Credit: Starting with tax returns filed after January 1, 2014, Texas taxpayers can claim the Texas R&D state credit to offset a portion of their franchise tax or use it towards sales and use tax exemption on the purchase or lease of depreciable, tangible property used in qualified research in Texas. Our experts can assist you with everything from Austin federal credit to Houston, Dallas and everywhere between in the Lone Star State. The credit rates for the Franchise Tax Credit are the following in the state of Texas:

• 2.5% for companies who have less than 3 years of QRE’s and did not work through a university.
• 3.125% for companies who have less than 3 years of QRE’s, but did work through a university.
• 5% for companies who have 3 years of QRE’s, but did not work through a university.
• 6.125% for companies who have 3 years of QRE’s and did work through a university.

Notes: The allowable Franchise Tax Credit in any one period, including carry forward amounts, cannot surpass 50% of the franchise tax liability for that period.